In the last years, I had the chance to devote most of my waking hours to think about a big issue for any business: distribution.
The way a company structures its operations become vital to its long-term ability to create value. In fact, the business model is an essential part of any business.
Often, especially in the start-up world, there is the belief that a great product or service is all you need. However, that is not the case.
In fact, the tech giants listed in this article all mastered distribution. There is no doubt that each of them has excellent products and offer incredible services.
However, without a proper distribution strategy, their success wouldn’t have been possible.
Company | Revenue Streams | Key Characteristics and Business Strategies | Core Value Proposition | Customer Segments | Distribution Channels |
---|---|---|---|---|---|
Apple | Hardware Sales, Software Sales, Services, App Store Sales, Licensing | 1. Hardware and Software Integration: Apple designs both hardware and software. 2. Ecosystem: Creating a seamless ecosystem of products and services. 3. Premium Pricing: Charging premium prices for quality products. | Delivering high-quality, integrated products and services that provide a user-friendly and seamless experience, appealing to users who value quality and integration. | Consumers, professionals, businesses | Retail stores, online store, App Store, partnerships. |
Microsoft | Software Sales, Cloud Services (Azure), Office 365 Subscriptions, Enterprise Services | 1. Software Dominance: Microsoft is a leader in software products. 2. Cloud Services: Expanding into cloud computing. 3. Enterprise Solutions: Offering enterprise software and services. | Providing essential software solutions for businesses, cloud services for scalability, and a suite of enterprise solutions, catering to organizations’ productivity and technology needs. | Enterprises, businesses, developers | Licensing, cloud subscriptions, Azure, partners. |
Advertising (Google Ads), Cloud Services (Google Cloud Platform), App Sales, Hardware Sales | 1. Search Engine: Google’s search engine is a core product. 2. Advertising: Generating revenue through advertising. 3. Data Services: Collecting and analyzing user data. | Offering the world’s most popular search engine, enabling businesses to reach their audience through advertising, and utilizing data to provide personalized services and insights to users and advertisers. | Internet users, advertisers, businesses | Online search, advertising platforms, cloud services. | |
Advertising (Facebook Ads), Social Media Marketing, Oculus Sales, Hardware Sales | 1. Social Media: Facebook is a leading social media platform. 2. Advertising: Monetizing through targeted advertising. 3. Ecosystem: Expanding into other platforms (Instagram, WhatsApp). | Connecting people worldwide on a social media platform, offering targeted advertising to businesses, and expanding its ecosystem to encompass various communication and sharing services. | Social media users, advertisers, businesses | Facebook platform, Instagram, WhatsApp, advertising networks. | |
Amazon | E-commerce Sales (Retail and Marketplace), Amazon Web Services (AWS), Prime Membership Subscriptions | 1. E-commerce: Amazon is a dominant player in online retail. 2. Amazon Web Services (AWS): Providing cloud infrastructure. 3. Prime Membership: Offering subscription benefits. | Providing a vast online marketplace for consumers, cloud infrastructure services for businesses, and subscription benefits like fast shipping and content access, enhancing convenience and value for customers. | Online shoppers, businesses | Online marketplace, AWS, Prime membership, physical stores. |
Netflix | Subscription Revenue (Streaming Plans), Content Licensing (Originals), Merchandise Sales | 1. Streaming: Netflix is a leading streaming platform. 2. Original Content: Producing exclusive content. 3. Subscription Model: Charging monthly fees for access. | Delivering a wide range of streaming content, including exclusive original shows and movies, to subscribers through a subscription-based model, offering entertainment and flexibility in viewing. | Streamers, entertainment enthusiasts | Online platform, mobile app, partnerships. |
Tesla | Electric Vehicle Sales, Energy Product Sales (Solar and Batteries), Autopilot Features | 1. Electric Vehicles (EVs): Tesla designs and manufactures EVs. 2. Autonomous Driving: Investing in autonomous technology. 3. Energy Products: Offering solar and energy storage solutions. | Leading the EV market with innovative electric vehicles, pursuing autonomous driving technology, and providing sustainable energy solutions, targeting environmentally conscious consumers and businesses. | Electric vehicle enthusiasts, eco-conscious buyers | Direct sales, online orders, showrooms, superchargers. |
Uber | Ride-Sharing Revenue, Uber Eats Sales, Advertising (Uber Ads), Freight Brokerage Fees | 1. Ride-Sharing: Uber offers on-demand ride-sharing services. 2. Food Delivery: Expanding into food delivery. 3. Mobility: Pursuing various mobility solutions. | Providing convenient transportation options through a mobile app, including ride-sharing and food delivery, and exploring new mobility services, addressing the evolving transportation needs of individuals and cities. | Ride-seekers, foodies, urban commuters | Mobile app, partnerships, Uber Eats. |
Airbnb | Accommodation Booking Fees, Experience Booking Fees, Airbnb Plus and Lux Rentals, Host Fees | 1. Short-Term Rentals: Airbnb connects travelers with unique short-term rental accommodations. 2. Host Services: Tools and support for hosts. 3. Experiences: Offering guided activities. | Enabling travelers to discover unique accommodations and experiences worldwide while providing hosts with a platform to earn income by renting their properties or hosting activities, creating a global hospitality community. | Travelers, hosts, experience seekers | Online platform, mobile app. |
Advertising (Promoted Tweets, Trends), Data Licensing (Access to Twitter Data), MoPub Mobile Advertising | 1. Microblogging: Twitter is a prominent microblogging platform. 2. Advertising: Monetizing through targeted advertising. 3. Real-Time Information: Providing real-time news and updates. | Offering a platform for concise communication and real-time information sharing, while allowing advertisers to reach engaged audiences through promoted content and trends, fostering global conversation. | Social media users, advertisers, businesses | Online platform, mobile app, advertising networks. | |
Salesforce | Subscription Revenue (CRM), Cloud Services (Salesforce Cloud), Professional Services | 1. Customer Relationship Management (CRM): Salesforce offers CRM solutions. 2. Cloud Services: Providing cloud-based applications. 3. Integration: Focusing on integrations with various platforms. | Helping businesses manage customer relationships, streamline operations through cloud-based applications, and integrate with other platforms, enhancing customer engagement and productivity. | Enterprises, sales and marketing teams | Cloud services, subscription model, partnerships. |
Talent Solutions (Recruitment and Job Postings), Marketing Solutions (Ads), Premium Subscriptions | 1. Professional Networking: LinkedIn is a leading professional networking platform. 2. Recruitment: Offering job postings and recruitment tools. 3. Content: Providing industry-related content. | Facilitating professional connections and networking, aiding in talent recruitment and job seeking, and offering valuable industry insights and content, serving as a platform for career growth and development. | Professionals, job seekers, recruiters | Online platform, mobile app, premium subscriptions. | |
Spotify | Subscription Revenue (Premium Plans), Advertising Revenue (Spotify Ads), Merchandise Sales | 1. Music Streaming: Spotify is a major music streaming service. 2. Freemium Model: Offering both free and premium subscriptions. 3. Personalized Playlists: Curating personalized music experiences. | Providing access to an extensive music library with both free and premium subscription options, along with personalized playlists and recommendations, offering an enjoyable music streaming experience. | Music enthusiasts, streamers, advertisers | Online platform, mobile app, freemium model. |
Adobe | Software Sales (Creative Cloud, Document Cloud), Subscription Revenue (Creative Cloud), Cloud Services | 1. Creative Software: Adobe develops creative software tools. 2. Subscription Model: Shifting to a subscription-based model. 3. Cloud Services: Offering cloud-based creative solutions. | Offering industry-standard creative software, transitioning to a subscription-based model for accessibility, and providing cloud services for collaborative and efficient creative work, catering to professionals and creatives. | Creative professionals, designers, businesses | Licensing, subscriptions, cloud services. |
PayPal | Transaction Fees (Online Payments), Payment Processing Fees (Businesses), Interest on Funds in Accounts | 1. Online Payments: PayPal enables online and mobile payments. 2. Payment Processing: Offering payment solutions for businesses. 3. Financial Services: Expanding into financial services. | Simplifying online payments for consumers, providing secure payment solutions for businesses, and exploring additional financial services, making digital transactions convenient and accessible to all. | Online shoppers, businesses, financial users | Online platform, mobile app, partnerships. |
Netflix | Subscription Revenue (Streaming Plans), Content Licensing (Originals), Merchandise Sales | 1. Streaming: Netflix is a leading streaming platform. 2. Original Content: Producing exclusive content. 3. Subscription Model: Charging monthly fees for access. | Delivering a wide range of streaming content, including exclusive original shows and movies, to subscribers through a subscription-based model, offering entertainment and flexibility in viewing. | Streamers, entertainment enthusiasts | Online platform, mobile app, partnerships. |
Tesla | Electric Vehicle Sales, Energy Product Sales (Solar and Batteries), Autopilot Features | 1. Electric Vehicles (EVs): Tesla designs and manufactures EVs. 2. Autonomous Driving: Investing in autonomous technology. 3. Energy Products: Offering solar and energy storage solutions. | Leading the EV market with innovative electric vehicles, pursuing autonomous driving technology, and providing sustainable energy solutions, targeting environmentally conscious consumers and businesses. | Electric vehicle enthusiasts, eco-conscious buyers | Direct sales, online orders, showrooms, superchargers. |
Uber | Ride-Sharing Revenue, Uber Eats Sales, Advertising (Uber Ads), Freight Brokerage Fees | 1. Ride-Sharing: Uber offers on-demand ride-sharing services. 2. Food Delivery: Expanding into food delivery. 3. Mobility: Pursuing various mobility solutions. | Providing convenient transportation options through a mobile app, including ride-sharing and food delivery, and exploring new mobility services, addressing the evolving transportation needs of individuals and cities. | Ride-seekers, foodies, urban commuters | Mobile app, partnerships, Uber Eats. |
Airbnb | Accommodation Booking Fees, Experience Booking Fees, Airbnb Plus and Lux Rentals, Host Fees | 1. Short-Term Rentals: Airbnb connects travelers with unique short-term rental accommodations. 2. Host Services: Tools and support for hosts. 3. Experiences: Offering guided activities. | Enabling travelers to discover unique accommodations and experiences worldwide while providing hosts with a platform to earn income by renting their properties or hosting activities, creating a global hospitality community. | Travelers, hosts, experience seekers | Online platform, mobile app. |
Advertising (Promoted Tweets, Trends), Data Licensing (Access to Twitter Data), MoPub Mobile Advertising | 1. Microblogging: Twitter is a prominent microblogging platform. 2. Advertising: Monetizing through targeted advertising. 3. Real-Time Information: Providing real-time news and updates. | Offering a platform for concise communication and real-time information sharing, while allowing advertisers to reach engaged audiences through promoted content and trends, fostering global conversation. | Social media users, advertisers, businesses | Online platform, mobile app, advertising networks. |
Apple: It’s still all about the iPhone
Apple’s business model is based on the sales of products. It is undeniable that the value of those products is based on Apple’s ability to create a friendly environment for its products.
Apple sold over $191 billion worth of iPhones in 2021!
Apple’s sales breakdown | 2021 |
iPhone | $191.97B |
Mac | $35.19B |
iPad | $31.86B |
AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch and accessories |
$38.36B |
Services (Company’s advertising, AppleCare, cloud, digital content, payment, and other services) |
$68.42B |
Total | $365.81B |
As of 2021, the iPhone still represents over 52% of the total sales.
Microsoft: The octopus of tech!
Founded in 1975 Microsoft has survived a few tech bubbles and thrived. In fact, as of the time of this writing, Microsoft is still one of the most valued companies, with a market capitalization of over seven hundred billion dollars.
That is also because the company has been able to use the excess cash it generated in the last decades to acquire new ventures.
In fact, when Microsoft sniffs a trend, it goes all in. For instance, in 2016 Microsoft bought LinkedIn to enter the professional network space.
Microsoft is also in the search and advertising industry with Bing. In short, Microsoft has been able to use its cash cow, the Microsoft Office System to diversify its business model.
Today Microsoft is quite diversified and it comprises platforms, like LinkedIn.
2021 | |
Server products and cloud services | $52.59B |
Office products and cloud services | $39.87B |
Windows | $23.22B |
Gaming | $15.37B |
$10.29B | |
Search advertising | $8.5B |
Enterprise services | $6.9B |
Devices | $6.8B |
Other | $4.48B |
$168B |
In 2021, Microsoft generated over $168 billion in revenues, with server products and cloud services passing for the first time office products.
Amazon: The everything store
Amazon is one of the most disruptive tech companies. It started as an online bookstore to become the everything store; even though most of its revenues come from its store.
There is a growing part of the business that relies on seller services, subscription services (Prime), and cloud-based services (AWS). Therefore, Amazon too has a diversified business model.
It is highly probable that the part of the business related to seller services, subscriptions, and cloud-based services will be the most critical part of the company also from the revenue generation standpoint.
Amazon Revenue Breakdown | 2021 |
Online stores | $222B |
Physical stores | $17B |
Third-party seller services | $103.3B |
Subscription services | $31.76B |
AWS | $62.2B |
Advertising | $31.16B |
Other | $2.17B |
Although the cloud services represent a small part of the business as of now. What started as a “side project” might be the most important business segment in the coming years.
Google: The tech giant that became the web
Google’s business model is based mainly on advertising. Even though the company has placed some bets on products that are not related to its main business model.
Even though Google was a latecomer in the search engine industry, it took it over with the algorithm that changed the web: PageRank.
Google Revenue Breakdown | 2021 |
Google Search & other | $148.95B |
Google Network Members’ | $31.7B |
YouTube ads | $28.85B |
Google other | $28B |
Google Cloud | $19.2B |
Other Bets |
$0.75B |
As of 2021 81% of the revenues come from the advertising networks of Google. In fact, advertising generates over $209 billion dollars in revenues; no doubt that is the cash cow for Google.
It is also true that the company is growing other revenue streams (such as Apps, Google Cloud, and Hardware).
Those sources will grow more and more in the future as Google will rely less on advertising. Google’s business model, and ability to create value for several key players – I argue – is the key ingredient to its success.
Facebook: The social network
Facebook has been able to tap into the value of its billion users. Facebook’s business model is based on advertising.
In fact, as of 2021 over 97% of its revenues came from advertising.
Meta Revenue Breakdown | 2021 | % |
Advertising | $114.9 Billion | 97.5% |
Other revenue (payments and fees) | $721 Million | 0.6% |
Reality Labs (primarily sales of Oculus, now called Meta Quest) | $2.27 Billion | 1.9% |
Total | $117.9 Billion |
Throughout the 2020s, Facebook went thru a few turmoils. The latest, which posed a threat to its whole business model, was the Apple privacy change policy, which made Facebook advertising machine way less effective.
This forced Facebook to transition into Meta. A rebrand that was completed in 2022.
Handpicked case studies from the site:
- Amazon Business Model
- Netflix Business Model
- LinkedIn Business Model
- Google Business Model
- Apple Business Model
- Microsoft Business Model
- Baidu Business Model
- Facebook Business Model
- YouTube Business Model
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- Business Model
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